According to Meat and Livestock Australia (MLA) statistics, total Australian red meat exports were relatively steady in March 2020. Beef exports sat just shy of 94,000 tonnes swt, up 1% on February, with dropping slaughter only partially flowing through to export volumes. Lamb exports were up 5% on February to hit 25,000 tonnes swt, while mutton exports were down by 9%, reaching just 13,400 tonnes swt.
In its report, MLA said that manufacturing beef is “at the heart of the dichotomy emerging in global markets, as retail demand for mince surges, as consumers prepare to spend more time at home cooking, and food service demand drops with patrons unable or unwilling to dine-in”.
Australian beef exports to the US are back 10% on last year, underpinned by a 14% decline in manufacturing volume, which accounts for 60% of the trade. It is estimated that ground beef accounts for approximately 64% of beef products sold in US food service and the extensive COVID-19 restrictions now in place across the US will have a significant impact on import demand.
With lower US demand, MLA reported that processors have shifted more volume into Japan and, to a lesser extent, back to China. Up to March, it has largely been business as usual in Japan, highlighted by Australian exports of manufacturing beef growing 20% year-on-year. However, more recently, COVID-19 case numbers have escalated and the government’s declaration of a ‘state of emergency’ may mean Japan could soon face significant disruption in the food service sector.
Reports generally indicate that China is recovering from their initial COVID-19 shock, with beef exports in March lifting for the first time since December. Chinese demand is expected to continue to grow, if it can maintain its control over the outbreak, and kick upwards later in the year as the African Swine Fever (ASF) induced pork deficit encourages consumers to look elsewhere for their meat provisions.
MLA added that South America and New Zealand have experienced domestic logistical disruptions and a national lockdown respectively that have impacted exports so Australia is in a strong position if it can maintain a consistent supply.
Exports of lamb rose in March, reaching the highest volume since October 2019, but were still down 5% on March 2019. The rise in March was driven by the resurgence of China as its food service industry regained some life.
MLA warned that global lamb prices are likely to come under some pressure over the next year, as the premium priced protein is challenged by the emerging tough economic conditions around the globe.
It said that lower oil prices and air-freight disruption could potentially undermine demand out of the Middle East. Australian lamb, which often captures premium positioning in high-end food service in many markets, is feeling the impact of restaurant closures and MLA said that growing demand outside the foodservice channel in many markets, and a demand bounce-back in China, will be critical for sheepmeat in the coming months.
Looking ahead, MLA said that in many markets much of the recent panic buying will soon slow and fade, if it hasn’t already, as consumers around the world adapt and fall into new routines. “While many of Australia’s key markets are likely to enter a certain level of economic downturn, red meat will remain a staple component of many consumer diets. Additional factors such as the ASF-induced pork production deficit in China and other Asian markets will also support red meat sales. Most importantly, Australia’s strong credibility, with high safety and quality standards, will continue to underpin strong consumer demand for Australian red meat.”